Do I need to collect taxes? I am living in Ontario Canada, my site is international, based on some online shopping experience, if the customer comes from Ontario, I need to collect full taxes (GST and PST), and if customer comes from other provinces, I only collect GST. the the customer comes from wordwide, I do not collect tax. Is is correct? Thanks a lot!

I believe that is correct, although I think there's a level (something like $50,000) below which you're not required to deal with sales taxes.

sorry, what's sales taxes? can you give me an example?
(are PST and GST sales taxes?)

Originally posted by go77306
sorry, what's sales taxes? can you give me an example?
(are PST and GST sales taxes?)

Sales taxes = any taxes applied to the value of goods or services being sold. In Canada, that means PST/GST/HST.

They are called "Sales" taxes to distinguish them from "Income" taxes (which are applied against income earned), "Excise" taxes (which are applied against the value of goods being imported or exported), etc.

I know from experience that you only charge GST when the person is located in Canada even if the person is in your own province. (This is the case in Alberta but there is no PST) So i'd check that for Ontario. taxes are different from province to province. :D

Um, for GST it is 30k a year so if you make under you can still charge and keep it. Hint, if you want to make money in canada go offshore.

For GST yes it is $30k - however you would have to be very stupid to run a business and not get a GST number (thereby charging GST.)

Collecting GST has these advantages:

1) Extra 7% of revenue goes into your cash flow until it needs to be paid (Yearly for most people under $50K, monthly for people over the $500k mark.) Wow - combine that with PST... you've got an extra 15% of your revenues in your cash flow to work for you. Even better than an interest free loan.

2) You get refunded GST you paid for business expenses. So if you spend $20,000, you get your $1400 in GST back. Now, why would anyone not do this???

... the benefits are the same/similar with PST/QST.

Now on to the other question... who do you charge tax to?

1) GST to ALL Canadian Residents.
2) PST to residents of your province (if your province has PST... Alberta, Canada's only close to debt-free province, doesn't even charge PST making things much easier.)

As for exports - yes, you should charge GST. If you are Canadian you will be getting that extra tax into your cashflow and then when you have to pay it it goes into your country - thus lowering your corporate and personal income tax rates in the big picture.

Do you HAVE to charge GST on exported sales? Talk to your accountant. You can get away with it legally only because it gives you a competitive edge - other countries don't have to charge it on an international level so you don't have to either, otherwise you can't compete.

How do WE do it? We charge GST to Canadians only. We have been warned numerous times that this is not correct, but if we charge taxes it completely takes away our edge competitivley because we are instantly 7% more expensive.

genevaroth:

Charging GST and keeping it is known as nothing more than fraud. If you are just another company run by a 14 year old who wants to fly-by-night, go ahead, but once you start to get into business - and not just the web hosting business, any business - you'll realize that fraud is not a good way to go.

Also, something you will find out if you have any customers, is that you need to have something called a GST number to collect GST. This is how they track GST and make sure people like you don't commit fraud against the system.

I apologize if I mis-interpreted you, but I am pretty cynical about this - or maybe just experienced...

BTW guys,

PST=Provicial Sales Tax (Charged at different rates in different provinces, most are around 7 to 8%.)

GST=Federal Sales Tax at 7%. All businesses in Canada charge GST, except those that don't make more than a few hundred dollars a year and can't be bothered with the savings earned from GST, and those who are exempt - such as on Native Reserves.

QST/HST - Sales tax in Quebec - and, annoyingly for me (being that I just moved from ALberta where there is only GST to Quebec where I have GST and QST) QST is charged AFTER GST. EG:
$10.00 + GST@0.07 = $10.70.
$10.70 + QST@0.075=$11.61.

Originally posted by genevaroth
Um, for GST it is 30k a year so if you make under you can still charge and keep it. Hint, if you want to make money in canada go offshore.

Going offshore does reduce costs, but again - a large part of business is seeing the big picture. I am not here only to make a few dollars for myself, I want to succeed.

When you go offshore, your money goes offshore and stops working in your country.

When you keep your money in your country, it works in your country, and helps your countries economy. I won't explain why, they teach economics in school at a pretty early age.

Maybe for $100/month it isn't a big deal, but when we start to transfer millions/year it is a big deal - that could be another 20-30 jobs here in my hometown.

sorry, what's 'Go offshore'?

I am confused:

please see this PDF file from www.gov.on.ca: http://www.trd.fin.gov.on.ca/userfiles/page_attachments/3221115_Rsie_651.pdf

It says:

Example of Internet Service:
If you provide any of the following internet related services, you are not required to charge your customer RST:

1: membership ....
2: internet email services..
3: ...
4: ...
5: web hosting and/or domain name registration.


To my understanding, this means I only need to collect GST for my canadian customers, and do not collect PST for any customers (I live in Ontario).

"Going Offshore" means having hords of cheap labour do all your dirty work for you in other countries. India for example is well known for its programmers and other technical people - and very cheap labour.
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I'm not sure how the laws work for Ontario - I only know for GST across Canada. If that PDF says you don't need to charge PST for web hosting services, I would trust it.

Of course, if you're in business you'll have an accountant who gives exact answers to questions like this. It's rare that you see a business without an accountant, not that I'm trying to scare you away from getting into business - but do it properly and spend the time/money to have an accountant - it pays for itself.

refcom...

GST is not an income tax...you called it a federal income tax..

GST=Goods and Services Tax

Income and sales taxes aren't even on the same page.

Chaps - sorry about that, I corrected my typo. Yes, you are correct that income taxes and sales taxes are very different. The only real similarity is the name on the checks when you pay them.

You are also correct in your acronymn definition for GST.

BTW, my definitions do come directly out of my old accounting books when I went through two years of school to get into the accounting industry. I really should give credit to the accounting industry itself for my responses.

How the heck is anyone going to know who our customers are? Are they going to look at the addresses listed in my spreadsheet to see if anyone is Canadian or not?

I don't get it... So because I'm based in Canada I'm supposed to have a special order system that figures out if my customer is Canadian, and if so.. I'm supposed to add 7% GST on their total monthly cost?

And if they're from my province, I'm supposed to charge an EXTRA 7.5% on top of THAT!!??

Is that right?

yes, You need to different ordering systems ones based for you and the other for the other areas. Its all dumb, there a ways around i and if you host your server in us lets say its different anyway from what i see.